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 How to trade the News

News Trading or (Trade the news technique) is a term which we always hear, in this article I will describe how I see Forex News Trading and how I trade the news; I tried forex news trading for many years and discovered great things; how to use economic reports and forex news along with technical analysis.

In this article I will describe the most accurate and profitable FX techniques that each trader must use in his trades. First of all, we must use Technical and Fundamental analysis in our trades, we can’t rely on one without the other, we must use them both; Technical analysis analyses the history of the currency and predict the future price; each trader has a different forex strategy which he uses in analyzing the market, me too I have my own strategies and they are not hidden; you can check my forex forum and get whatever you want from it.

Let’s talk now about the fundamental analysis, I tried most of fundamental and news trading techniques but I didn’t find them worthy, it is real that releasing news can affect a certain currency, but how it affects the currency and when it deviates that currency, some economic reports make the currency jump 100 pips during the first split second of the time release – you must pay for this kind of service (getting the data in the second of the release)

In addition a report may affect a currency during the first 10 minutes or half hour but before it takes the right trend it can fluctuates up and down and may stop you out, many traders put entries above and below the price before 2 minutes of the release, and wait for the spike, but also it is not worthy method because it may happen that the news which deviate the currency doesn’t have enough power to hit the target or maybe the revision came opposite to the actual or the deviation between the actual and the forecast was not enough to enter a trade or maybe the report was released and the price was below a certain resistance which forbid the price to pass it, so you enter a LONG trade but you find that the price went up, then tests the resistance then turns back to the support level and stops you out.


I faced a lot of these problems and you will face it too if you don’t follow the right technique while trading the news. My technique is very simple and effective:

1 – Don’t trade all news trading reports, trade only those who create and define the direction of the trend (Interest rates, trade balance and NonFarm Payroll). Do not trade these news trading reports only because they are important it may happen that a report came better then expected but do not create a move. I enter a trade only if the actual data came much better or worse (good deviation) and the revised data came along with the actual data and there is no important conflicting report.

2 – The other normal news trading reports are also important; they are used to confirm or to close a trade especially when we are in the beginning of a specific trade; If you have just entered a trade and your current profit is between -20 and 20 pips and a specific report is released and that report affects the currency you are trading then we close it because this report has a good probability to stop you out. When you gain a good number of pips then you may not rely on normal economic reports and rely only on technical analysis and continue your trade until you hit your target.

Fundamental and news trading is a good technique but we must use it along with technical analysis, and we must take in consideration trading the important news reports, the deviation between actual and Consensus, the revised data, the conflicting news trading reports and the support and resistance levels.



Author: Joe Chalhoub
Website: http://www.rpchost.com

References:
http://www.rpchost.com/FreeForexSignal.aspx
http://www.rpchost.com/Economic-Calendar.aspx